Boat Building and Repairing

SIC 3732

Companies in this industry

Industry report:

This industry consists of establishments primarily engaged in building and repairing boats. Establishments primarily engaged in operating marinas and that perform incidental boat repair are classified in SIC 4493: Marinas. Membership yacht clubs are classified under SIC 7997: Membership Sports and Recreation Clubs; and outboard motor repair is classified under SIC 7699: Repair Shops and Related Services, Not Elsewhere Classified.

Industry Snapshot

The boating industry in the United States has grown steadily since the late 1990s. According to the U.S. Bureau of the Census , the value of shipments increased from $5.61 billion in 1997 to $8.66 billion in 2003, and rose to $11 billion in 2006 before growing to $12.6 billion in 2008. Although unit sales slipped in the early years of the first decades of the 2000s and again during the recession at the end of the decade, revenues were bolstered in the middle of the first decade of the 2000s by the sale of high-end, high-priced boats.

According to Dun & Bradstreet (D&B), by 2010 about 3,287 U.S. establishments were engaged in ship building and repairing. Together these firms employed 52,502 people and generated almost $3.4 billion in revenues. On average, companies employed 16 people and had revenues of around $1.1 billion. Major product segments included outboard motorboats, inboard motorboats, and inboard-outdrive boats. Other product types included sailboats and canoes. Boat building facilities varied from a few thousand square feet to more than 100,000, and some outside storage areas extended to several acres.

Organization and Structure

Outboard boats made up the largest category of boats built in the United States in the early 2010s. Boats in this category include runabouts, bass boats, utility boats, offshore fishing boats, and pontoons. Aluminum and fiberglass were the most common materials used in the construction of these boats. Inboard/outdrive (I/O) boats, also known as stern drive boats, were built by 109 companies in 2010. Inboard boats mainly include cabin cruisers and sport boats. Ski boats accounted for about half the inboard sport boats manufactured, and high-end cruisers accounted for a little less than half. Sailboats included both nonpowered sailboats and auxiliary powered craft that were 12 to 19 feet in length. Sales of personal watercraft, which were very popular during the 1990s, fell during the first half of the first decade of the 2000s. Other types of boats include unregistered small craft, such as canoes, rowboats, and dinghies; open-deck boats, including deck-style monohull runabouts and aluminum pontoons; and fishing boats, yachts, and houseboats.

Markets.Recreational boat registrations numbered 12,875,568 in 2007, with an estimated 18 million total boats in use. The top six states in terms of registrations were Florida, Michigan, California, Minnesota, Texas, and Wisconsin.

Establishment Distribution and Size.Boats are built primarily in areas near water. Geographically, Florida dominated the boat building and repairing industry in 2010, with 697 establishments, 10,171 employees, and $697.4 million in annual revenues. Washington, North Carolina, and Mississippi were also significant states in terms of revenue in the industry.

Boat building and repairing concerns vary dramatically in size. In the early 2010s, almost 68 percent of establishments employed only one to four people, according to D&B. The largest share of revenue, however, was generated by large operations, especially the 204 companies employing more than 50 workers. This group accounted for about 56 percent of the industry's total sales in 2010.

Background and Development

Prior to the mid-nineteenth century, boats in the United States were built primarily by the people who used them. Most were workboats designed for specific uses. These included whaling boats for the Arctic seas, dories for the Grand Banks, log canoes used by oystermen, and a huge variety of skiffs and other small craft. Eventually, boats became more versatile. The Whitehall was a pulling boat first used in New York harbor as sort of a water taxi. A classic rowing boat, the Whitehall was also found to be well suited as a sailing vessel, and it began to appear in other harbors on both coasts, with and without sails, and was sometimes used for fishing.

Around 1850, recreational boating began to grow significantly in the United States. Boat builders throughout the Northeast, previously makers of workboats, were in demand for the production of leisure boats for weekend amateurs. This led to a proliferation of Whitehalls, guide boats, and Saint Lawrence skiffs on lakes from New England to the Midwest. The popularity of rowboats dropped when the gasoline engine appeared in the United States in 1878. Professional as well as recreational fishermen began using boats with motors instead.

Some of the companies that were early entries in the early motorboat industry were automobile manufacturers. One such company was the Lozier Motor Company, which began building boats around the start of the twentieth century. Another important company in the early 1900s was the Electric Boat Company of Bayonne, New Jersey, which manufactured a wide variety of boats, including tiny launches and huge luxury cruisers by the time of the company's demise around 1950. Chris-Craft Boats was another important powerboat manufacturer by 1930. By the middle of the twentieth century, there was a renaissance of classic boat designs. New boats modeled on the vessels of the past were constructed using fiberglass and other modern materials. To an extent, this trend has continued.

In the 1950s, the number of recreational boats owned in the United States more than doubled, reaching more than 7 million by 1961. This number has generally continued to climb slowly and steadily since then. In the mid-1980s, the pleasure boat industry boomed, with product shipments growing at an average rate of 13 percent a year. In 1989, however, the economy soured, sending boat manufacturing into a tailspin. The industry's problems were compounded in 1991 when a 10 percent federal tax on boats retailing for more than $100,000 was imposed. Largely as a result of the tax, which was repealed two years later, the share of the pleasure boat market by dollar value accounted for by boats in that high-price bracket slipped from 33 percent to 25 percent in one year. Generally, the departure of several luxury boat builders from the market and the loss of thousands of industry jobs were blamed on the tax.

Two additional factors contributed to the major drop in the demand for boats in the United States during this time. One was the reluctance on the part of consumers to take on additional debt on top of that incurred during the industry's boom years of 1982 through 1988. Another factor was the overall decline in the economy during this period. As disposable personal income declines during economic downturns, pleasure boats, being large and unnecessary, or "luxury," purchases, are among the first items eliminated from shopping lists. A third factor was the 10 percent federal luxury tax on pleasure boats with price tags of more than $100,000.

The earliest signs of a recovery emerged in 1992. The 1993 repeal of the luxury tax appeared to help complete this recovery. Part of the increase in orders that took place was to rebuild dealers' inventories, which had reached the lowest levels in history by the beginning of 1992. Nevertheless, most manufacturers reported improving conditions, and some began rehiring laid-off workers. For example, Viking Yacht Co., which made high-end vessels, began rehiring as its workforce recovered from the plunge to 65 employees from its 1990 level of 1,500. Industry analysts expected the recovery to continue at a modest pace through the end of the 1990s. In preparation for the expected recovery, the boating industry faced the challenge of restoring consumer demand. Manufacturers were hopeful that the rapidly growing 35- to 54-year-old age group would live up to its demographic billing as big spenders on leisure activities such as boating.

The boating industry moved into the twenty-first century facing many issues that would have a significant impact. All these issues, including U.S. Environmental Protection Agency standards, operator licensing, marine wildlife protection laws, various new or increased user fees and taxes, and consumer debt, were expected to play a major role in determining the U.S. market for pleasure craft.

The recreational boating industry topped $11.4 billion in sales and services in 2006, decreased slightly to $11.1 the next year, and increased to $12.6 billion in 2008. Pre-owned boats accounted for nearly 72 percent of all boats sold. Sales of power boats, the predominant class of boats sold, were down 5 percent from 2005 as their higher prices subjected them to the whims of national economic fluctuations. Sales of less expensive canoes and kayaks were up 23 percent and 11 percent, respectively.

In 2008 boat and engine exports were $2.6 billion against imports of $1.2 billion, with inboard boats dominating the import and export markets. Canada represented just over half of the export market and nearly 90 percent of the import market, making it the nation's top trading partner in the industry.

The end of the first decade of the 2000s was challenging for the industry, as Americans' discretionary income dropped and recreation because a luxury. However, many were hoping for a recovery in both the economy and the boating industry at the beginning of the 2010s.

Current Conditions

According to an October 2011 report in Boating Industry, "sales of 15-foot or greater powerboats showed positive growth in September for the second straight month after almost six years of negative growth." In addition, outboard boat sales increased 5.1 percent. Another optimistic outlook came from The Freedonia Group, which predicted that the recreational boating industry in the United States would grow 9.3 percent annually through 2014. The Freedonia report predicted powerboats would lead the growth, driven by updated technology like newer propulsion systems and more advanced electronics. IBISWorld also projected growth in the market as "growing demand for more advanced and custom-made boats will drive profit upward." The IBISWorld report expected boat builders to target the aging baby boomer generation, who would be nearing retirement and have the funds and the time for such leisure activities as boating.

Industry Leaders

The world's leading manufacturer of pleasure boats and motors in the early 2010s was Brunswick Corporation, based in Lake Forest, Illinois. Founded in 1845, Brunswick was principally a maker of billiards and bowling equipment for much of its history. In the early 1960s, the popularity of bowling declined and the company diversified. By the following decade, Brunswick was building boats on a large scale. In 1986 Brunswick bought two significant boat companies, Bayliner and Ray Industries, and in 2004 Brunswick purchased Aluminum Boat Companies (Crestliner, Lowe, and Lund boats) from Genmar Holdings. In 2010 Brunswick reported net sales of $3.4 billion with 15,290 employees. Brunswick business units included the Mercury Marine Group, based in Fond du Lac, Wisconsin. The leading producer of marine engines in the world, Mercury Marine posted 2010 net sales of $366.7 million.

Genmar Holdings, headquartered in Minneapolis, had been an industry leader during most of the first decade of the 2000s until it filed for bankruptcy in 2009. Most of its assets were auctioned in 2010. Former Genmar CEO Irwin Jacobs, together with John Paul Mitchell Systems, acquired six of Genmar's boat brands, including Triumph, and the Virtual-Engineered Composites technology, which was a closed-mold and much faster process used to make large boat parts. Platinum Equity purchased a portion of Genmar, including the boat brands Stratos and Ranger.

Research and Technology

For more than 40 years, fiberglass was the most common material used to build small watercraft. However, in 1999 a new process called Advanced Composite Process (ACP) incorporated a vacuum-formed outer shell reinforced by a central foam core with inner bi-directional fabric for added strength, making the hulls of boats five times stronger against impact and exposure. Along with enhanced quality, this automated process cut work time in the production of the boat hulls versus the more labor intensive fiberglass product.

Along with the technology for creating stronger, lighter boats, a new add-on feature was introduced to the pleasure boat industry in the late 1990s. Boats were offered with swim platforms that were 15 to 20 percent larger than prior conventional designs without compromising performance.

Some of the most impressive innovations in the boat industry in the first decade of the 2000s were in electronics. VHF (very high frequency) radios, which were among the most common pieces of boating equipment, evolved from heavy, permanently installed instruments to hand held, portable devices. Advances also were made in atmosphere sensor technology, including equipment for detecting carbon monoxide. Another major technological development in boating was the Global Positioning System (GPS), a satellite-based navigational system originally developed by the Defense Department for use in deploying weapons. Wireless technology led to boat-based Internet service for e-mail, communication, and navigation, as well as off-boat tracking, monitoring, and control.

The boat repair industry also has benefited from technological advances. Computer-based inventory systems enabled companies to keep their inventories small, while improving the efficiency of parts delivery.

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